How to manage credit responsibly – The Collegian

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Lorna Wounded Head is the Family Resource Management Field Specialist at SDSU.

We know you’ve more than likely received a letter from a lender saying, “You’ve been prequalified for a $1,000 line of credit.” Did you know that credit card companies often target students because lenders realize that students have limited expenses and hours to work as a full-time student? If a student accumulates a credit card balance, it means that the lender will collect more interest. Understanding the liability of a credit card is important for creating smart credit spending habits.

Building your credit, however, is an important step in your financial future. You often need a credit history to rent an apartment, apply for a loan, and even get a cell phone in your name. Each time you use credit, you add a chapter to your credit history. All your credit transactions are recorded in a credit report, which is made available to potential lenders who want to know how you have used credit in the past. You can check your credit report for free at www.annualcreditreport.com.

Your credit history contains all uses of credit, such as student loans and daily credit purchases. A credit score is assigned to you based on the details of your credit file. Your credit score is a snapshot of your creditworthiness, which lenders use to decide if you are a credit risk. The higher your credit score, the more creditworthy you are and the more likely you are to receive credit. It’s important to balance these wants versus needs when using a credit card because it’s easy to splurge when you know you have money. College is a good time to start building your credit history and you can do this by making payments on time and ideally in full each month.

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